Fiddling with Medicare

How Trump administration wants to change Medicare drug payments

Looking for ways to fulfill its commitment to reduce drug costs, the Trump administration reached into a grab bag filled with Medicare reforms, pulled out a fist full and dropped them into its FY19 budget request.

The mismatched combination of policies it selected, ideas proposed over the years by the Medicare Payment Advisory Commission, Democrats and Republicans, has set off a lobbying frenzy as beneficiaries, plans and drug companies try to protect themselves, frequently at the each other’s expense.

It is too early to predict which, if any, of the proposals will be enacted.

There are no estimates available for the cost of several of the proposals, nor is there evidence that the Trump administration has considered how the proposals would work together, or what their combined impact would be on beneficiaries, taxpayers or the healthcare system.

The first step toward making these assessments is understanding what has been proposed, who would win and who would lose, and how the proposals could reinforce or cancel each other out (see “Tinkering with Medicare Drug Reimbursement”).

Ironically, the administration is seeking to make the most extensive changes to one of the most popular, and arguably the most successful, Medicare benefits, the Part D drug program.

“Right now we are on track in this piecemeal fashion to end up with what is a very bad design.”

Douglas Holtz-Eakin, American Action Forum

Some of the changes it is seeking would increase premiums

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